Debt Reduction

Credit-Card Tricks

By John Henry

Mesa, AZ. http://www.nationwidedr.com/
I want to be the king of my neighborhood and want to get the best gas barbeque, bar and refrigerator available on the market today. The price tag in the $5,000 range and I want it badly, so I buy it on my credit card. I know if I pay it $125/month for 40 months it will be paid off right. I mean $125 times 40 months is $5,000 right? Not so fast kimosabi. Interest, the king of the credit card money making machine. To be the barbeque king in my neighborhood, it is going to cost me $7,115.42 at 18%, and that is if I never use the card for anything else...EVER!
To me, this is a sham. You see, like 75 million other Americans, I have credit-card debt. It's leftover from my 30s, when I got married and then beginning my financial planning career in California. Back then my salary barely covered my rent, and, well, a weekend night out with the boys.
Slowly but surely, however, I'm paying those cards off. And it seems I'm not alone. As many as 70% of credit-card users carry a balance on their credit cards. If were to have a recession, which I believe we are very close to right now, thing could get even worse. Thanks to low mortgage rates, many people also tapped the equity in their home, which helped them pay down credit-card debt, however using our homes for ATM's has all but dried up with housing prices continuing to decline.
So, what happens if my wife or I loose our jobs? We missed one payment already on one of our cards and our creditors raised the rate on all of our cards to 22.5% for 18%. I now understand they can go as high as 29% or higher...and this for missing one payment! Therefore, do yourself a favor and read the fine print before you sign up for that gas BBQ Grill card with a $10,000 limit and a 0% introductory APR. Make sure you do not miss a payment...ever. Finally, if possible, pay down your credit card debt and get rid of them if you can. You will be surprised at how much interest you are paying every year for this "luxury."